If there was any hope left that Europe might get serious about fixing its debt problems -- making the tough spending cuts and tougher tax hikes necessary to repair its fraying national balance sheets -- then this latest news out of Britain this week should put an end to that.

Over in Britain, consumers are throwing a veritable conniption over a government plan to levy taxes on a popular baked good known as the "pasty." (Insert joke about native British complexions here.)

The food in question resembles what we know here as a "Hot Pocket," except that it's sold fresh, not frozen, and has historically been exempt from Britain's value-added tax levied on other takeout foods. What the government was proposing was a modest step of taxing one food item -- just as it already taxes others -- in hopes of raising $54 million toward closing Britain's near-$200 billion fiscal 2012 budget deficit.
It was not to be.

Amidst accusations that the British government is "out of touch" with the common man, Britons took to the streets to protest the pasty tax. And now the government has caved.

Henceforth, pasties will remain untaxed. What's more, as an extra measure of apology for its attempt at fiscal sanity, the government further agreed to cut the tax on towable mobile homes from 20% to 5%.

Tempest in a Teacup?

Now, if you're shaking your head and tsk-tsk-ing over yet another "Europeans are crazy" story, but thinking this doesn't really affect you at all... then think again.

On Wednesday, revived fears that Europe may be unable to come to grips with its pervasive debt problems helped push the U.S. stock market into a nosedive. If British politicians' response to criticism of a tax that would address all of 0.027% of its budget deficit is to duck and run for cover rather than face the heat, then it's worth asking: What is the likelihood that Europe will take the far more painful steps necessary to solve its budget imbalances? What are the chances they'll ever get this mess fixed, and remove the overhang that's killing our 401(k) returns here in the U.S.?